We woke up this morning to the news of President Obama’s $4 Trillion budget blueprint which which will likely set up fights with congress. He proposed a $3.99 trillion budget for fiscal year 2016 that goes head to head with Republicans over programs to boost the middle class that are funded by higher taxes on corporations and wealthy Americans. On the news, Ms. USA gained a bit against Mr. Japanese Yen rebounding from the pivot level of 117.
Over the weekend the Greek Finance Minister waxed lyrical over Greece and the monetary union, emphasizing that the union between Greece and the Eurozone was an irrevocable one, “Europe comes first”. Mr Varoufakis is flying the Greek flag high on his campaign to “end the addiction” to debt. Following talks this weekend with his French supporting counterparties Mr Varoufakis will be trying to curry favour with George Osborne today as further plans are drawn up to pull the indebted nation out of the mire. The prospect of Greece receiving another tranche of the bailout package has been taken of the table, “It’s not that we don’t need the money, we’re desperate because of certain commitments and liabilities that we have,” he said. “We have resembled drug addicts craving the next dose. What this government is all about is ending the addiction.”
Coming up, we have 5 hot economic events this week that can boost volatility in the major currency pairs that you can trade.
1. AUD/USD on RBA interest rate decision (Tues, 4:30 am GMT)
The land down under will be on the news early in the Asian session, first with Aussie Trade Balance at 1:30 AM and then with Cash rate and rate statement at 4:40 AM GMT. As we have covered before, most central banks shifting to a more cautious stance these days, so investors are expecting to hear dovish remarks from Reserve Bank of Australia Governor Glenn Stevens this week as well.. Other investors are counting on the RBA to cut interest rates, as the recent slump in oil prices has also dragged most commodity prices lower and might have been hurting Australia’s export revenues.
A more hawkish than expected statement would push Mr. Aussie higher up on the forex dance floor.
2. NZD/USD on New Zealand quarterly jobs release (Tues, 10:45 pm GMT)
Right in hte neighborhood, New Zealand will be releasing its Q4 2014 jobs report towards the middle of the trading week. The report could indicate another 0.8% quarterly gain in hiring, probably enough to bring the jobless rate down from 5.4% to 5.3%.
Stronger than expected data could provide the Kiwi a much-needed pause from last week’s drops while weaker than expected jobs figures could lead to more down moves on the forex dance floor.
3. GBP/USD on BOE monetary policy statement (Thurs, 1:00 pm GMT)
Another central bank set to make its policy announcement this week is the Bank of England. In their previous statement, BOE policymakers didn’t seem too concerned about the downturn in inflation, as officials even noted that this could spur stronger consumer spending.
However, minutes of their previous meeting reflected less pressure to tighten policy, as hawkish MPC members McCafferty and Weale voted to keep interest rates on hold. Since then, price levels have continued to decline and might be enough to make BOE Governor Carney and his men a tad more worried this time.
The pound’s price action during previous BOE statements suggests that forex traders would rather wait for the minutes of the meeting to be released a couple of weeks later before deciding on their longer-term bias. Still, be ready for any volatile moves among pound pairs if there are any surprises in this week’s BOE announcement.
4. USD/CAD on Canadian jobs report (Fri, 2:30 pm GMT)
After posting back-to-back months of job losses, the Canadian economy could show a 5.1K rebound in hiring for its January employment report. However, analysts predict that the oil industry slump could still be taking its toll on hiring, which suggests that a negative surprise is possible.
Significant downward revisions are also expected for the previous releases, as full-time hiring trends have reportedly weakened throughout 2014 and onto the start of this year. With that, the Loonie might be in for another bloodbath if jobs figures come in the red on Friday and lead to speculations of another rate cut from the BOC.
5. USD crosses on U.S. NFP release (Fri, 2:30 pm GMT)
Last but certainly not least is the U.S. non-farm payrolls up for release on Friday’s New York trading session. The economy is expected to have added 231K jobs in January, slightly slower compared to the 252K in hiring gains for December 2014. The jobless rate is expected to hold steady at 5.6% for now.
What’s interesting to note about the U.S. employment report is that the past four releases have all seen upward revisions, indicating that the jobs sector is doing much better than initially anticipated. Add to that the fact that the FOMC is sticking to its hawkish stance and we’ve got a solid possibility of seeing more upward dance moves for Ms. USA!
Which of the hot economic events are you planning to trade this week?